No Sale, Searle`s Board Decides

Complexity, Price Possible Factors

In a surprise move, G.D. Searle & Co. said Monday its board voted unanimously not to sell part or all of the Skokie-based firm and that Searle would continue as an independent company.

The announcement came almost six months to the day after the maker of pharmaceuticals and the low-calorie sweetener aspartame confirmed a Tribune report that the Searle family was considering selling the 34 percent of the company`s outstanding shares that it controls.

Why the company decided to call off the possible sale of its businesses remained unclear. Family members and Donald Rumsfeld, president and chief executive officer, were unavailable for interviews with either the press or the investment community.

Investment-community sources speculated that complications of splitting the company into more than one piece or simply the inability of the family to get the price it wanted finally torpedoed negotiations.

In response to Monday`s announcement, Searle`s stock plunged 14 percent on the New York Stock Exchange, closing at $48.75 a share, down $8. More than 2.5 million shares changed hands,.

In a letter to Rumsfeld, the family members pledged to remain as major investors in the firm founded by Gideon D. Searle nearly a century ago. The company had said a major reason for considering the sale was a desire by family members to diversify their holdings.

``We want to assure you that we regard the exploration of the sale of the company at an end and that we have no plans to revisit that question,`` said the letter from Daniel Searle, Suzanne Searle Dixon and William Searle. Daniel Searle is chairman of the firm`s 13-member board, which includes William Searle; Wesley Dixon Jr., Suzanne Searle Dixon`s husband; and Rumsfeld. The letter was released by the company.

Rumsfeld welcomed the board`s decision as an expression of ``the fundamental confidence we have in the company.`` He added, ``We expect 1985 to be a year of improved financial performance as well as a period of continued investment`` in Searle products.

Meanwhile, analysts said they would cut their earnings estimates for the company in the wake of a Rumsfeld statement that an earnings increase in 1985 would be ``moderated`` by several factors. The Searle chief executive cited increases in research and development spending, a higher tax rate and lower profit margins on the NutraSweet brand of aspartame because of price cuts needed to persuade soft-drink makers to use only NutraSweet in sweetening their diet sodas.

Still, the company announced it was almost doubling its quarterly dividend, to 25 cents a share from 13 cents, payable June 5 to shareholders of record May 13. It marks the first change in the Searle dividend since the second quarter of 1975, when the quarterly dividend was boosted to its current level from 11.5 cents a share.

One source close to the company indicated that the change in the dividend might help allay some of the Searle family`s concerns about having a large amount of money tied up in the stock.

A large investor indicated that as late as last Friday it appeared that a deal would be completed, with contracts already drawn up. The situation was reminiscent of early February, when investment-community sources told The Tribune that terms of a sale had been agreed on. At that time, the sale price was believed to be between $64 and $68 a share, or about $3.2 billion.

This time, the sum of the high bids for the NutraSweet, pharmaceutical and consumer-products portions of Searle reportedly reached $70 a share, or $3.5 billion. That amount would have ranked the deal, along with Capital Cities Communications Inc.`s proposed acquisition of American Broadcasting Cos., as one of the largest nonoil-company mergers in history.

Of the $70 offered, Pfizer Inc. was believed to have bid $30 a share, or about $1.5 billion, for the booming NutraSweet business. A similar offer came from ANGUS Chemical Co. of Northbrook. However, that offer was believed to be unacceptable, because the financing involved so-called ``junk bonds,`` meaning less-secure debentures, rather than cash.

Roger E. Secrist, ANGUS chairman and chief executive officer, said that while disappointed by Searle`s decision, his company would pursue its own plans to manufacture aspartame for overseas markets.

Spokesmen for Pfizer, ANGUS and Monsanto declined to comment on the specifics of their offers.

Wall Street observers pointed to the complexity of the deal, especially when it came to selling the company in pieces. One problem was a possible tax liability on Searle`s pharmaceutical business of at least $381 million, the result of a dispute about how to tax a Puerto Rican subsidiary.

There were also worries about possible competition for NutraSweet or unanticipated health problems surfacing from the sweetener`s use.

Worldwide sales of NutraSweet and Equal, two Searle brands for aspartame, reached $585 million in 1984, or almost half of Searle`s revenues. Sales of the sweetener could jump to $800 million this year, industry sources estimate.